July 30, 2018 - 6:00 AM EDT
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Diamond Offshore Announces Second Quarter 2018 Results

- Net loss of $(69) million, or $(0.50) per diluted share - Adjusted net loss of $(45) million, or $(0.33) per diluted share

HOUSTON, July 30, 2018 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported the following results for the second quarter of 2018:

 


Three Months Ended


Thousands of dollars, except per share data

June 30, 2018


March 31, 2018


Total revenues 

$                  268,861


$                  295,510


Operating (loss) income

(52,375)


512


Adjusted operating (loss) income 

(23,885)


3,294


Net (loss) income  

(69,274)


19,321


Adjusted net loss

(44,900)


(21,345)


(Loss) earnings per diluted share 

$                      (0.50)


$                        0.14


Adjusted loss per diluted share 

$                      (0.33)


$                      (0.16)


 

"We made strong progress in the second quarter of 2018, securing several new fixtures that add an additional net 5 years of backlog across our 6th generation drillships," said Marc Edwards, President and Chief Executive Officer.

The Company extended the current Ocean BlackHawk contract through the second quarter of 2021 and also executed two new two-year contracts, one for the Ocean BlackHornet and one for a yet to be named drillship, which are scheduled to commence in 2020. Edwards added, "With this new backlog, our 6th generation drillships are now contracted into the next decade at rates that are materially above current market. We believe this contracting activity positions Diamond Offshore for success during the remainder of this prolonged downturn, and beyond."

Edwards concluded with, "We also took another step towards improving offshore drilling efficiencies and reducing total cost of ownership for operators with the recent launch of our Blockchain Drilling service, the first application of industrial blockchain technology in the offshore drilling industry. The implementation of this service and other recently released innovations demonstrates our thought leadership in the offshore drilling market and enables differentiation of our global fleet."

As of July 1, 2018, the Company's total contracted backlog was $2.2 billion, which represents 23 rig years of work.

CONFERENCE CALL

A conference call to discuss Diamond Offshore's earnings results has been scheduled for 7:30 a.m. CDT today.  A live webcast of the call will be available online on the Company's website, www.diamondoffshore.com. Those interested in participating in the question and answer session should dial 844-492-6043 or 478-219-0839 for international callers. The conference ID number is 4479039. An online replay will also be available on www.diamondoffshore.com following the call.

ABOUT DIAMOND OFFSHORE

Diamond Offshore is a leader in offshore drilling, providing innovation, thought leadership and contract drilling services to solve complex deepwater challenges around the globe. Additional information and access to the Company's SEC filings are available at www.diamondoffshore.com. Diamond Offshore is owned 53% by Loews Corporation (NYSE: L).

FORWARD-LOOKING STATEMENTS

Statements contained in this press release or made during the above conference call that are not historical facts are "forward-looking statements" within the meaning of the federal securities laws.  Forward-looking statements are inherently uncertain and subject to a variety of assumptions, risks and uncertainties that could cause actual results to differ materially from those anticipated or expected by management of the Company.  A discussion of certain of the important risk factors and other considerations that could materially impact these matters as well as the Company's overall business and financial performance can be found in the Company's reports filed with the Securities and Exchange Commission, and readers of this press release are urged to review those reports carefully when considering these forward-looking statements.  Copies of these reports are available through the Company's website at www.diamondoffshore.com.  These risk factors include, among others, risks associated with worldwide demand for drilling services, level of activity in the oil and gas industry, renewing or replacing expired or terminated contracts, contract cancellations and terminations, maintenance and realization of backlog, competition and industry fleet capacity, impairments and retirements, operating risks, litigation and disputes, changes in tax laws and rates, regulatory initiatives and compliance with governmental regulations, casualty losses, and various other factors, many of which are beyond the Company's control.  Given these risk factors, investors and analysts should not place undue reliance on forward-looking statements.  Each forward-looking statement speaks only as of the date of this press release.  The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.

Contact:   
Samir Ali
Vice President, Investor Relations & Corporate Development
(281) 647-4035

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)










Three Months Ended 


Six Months Ended 

June 30,

June 30,


2018


2017


2018


2017









Revenues:








Contract drilling 

$    265,353


$    392,170


$    553,279


$    755,727

Revenues related to reimbursable expenses 

3,508


7,119


11,092


17,788

Total revenues 

268,861


399,289


564,371


773,515









Operating expenses:








Contract drilling, excluding depreciation 

189,321


196,217


374,010


399,740

Reimbursable expenses 

3,414


6,790


10,884


17,268

Depreciation 

81,825


85,982


163,650


179,211

General and administrative 

18,236


19,010


36,749


36,493

Impairment of assets 

27,225


71,268


27,225


71,268

Restructuring and separation costs

1,265


-


4,276


-

Gain on disposition of assets 

(50)


(802)


(560)


(2,148)

Total operating expenses 

321,236


378,465


616,234


701,832









Operating (loss) income  

(52,375)


20,824


(51,863)


71,683









Other income (expense):








Interest income 

2,001


396


3,638


571

Interest expense 

(29,585)


(27,251)


(57,903)


(54,847)

Foreign currency transaction gain (loss)

411


(927)


858


160

Other, net 

262


(62)


842


(125)









(Loss) income before income tax benefit 

(79,286)


(7,020)


(104,428)


17,442









Income tax benefit 

10,012


22,969


54,475


22,046









Net (loss) income 

$    (69,274)


$     15,949


$    (49,953)


$     39,488









(Loss) income per share 

$        (0.50)


$         0.12


$        (0.36)


$         0.29









Weighted-average shares outstanding:








Shares of common stock 

137,429


137,224


137,362


137,199

Dilutive potential shares of common stock 

-


3


-


36

Total weighted-average shares outstanding 

137,429


137,227


137,362


137,235










 

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

(Unaudited)             

(In thousands)             


Three Months Ended


June 30,


March 31,


June 30,


2018


2018


2017







REVENUES RELATED TO CONTRACT DRILLING

$    265,353


$    287,926


$    392,170

REVENUES RELATED TO REIMBURSABLE EXPENSES

3,508


7,584


7,119

TOTAL REVENUES

$    268,861


$    295,510


$    399,289







CONTRACT DRILLING EXPENSE, EXCLUDING DEPRECIATION

$    189,321


$    184,689


$    196,217

REIMBURSABLE EXPENSES

$        3,414


$        7,470


$        6,790







OPERATING (LOSS) INCOME 






Contract drilling services, net

$      76,032


$    103,237


$    195,953

Reimbursable expenses, net 

94


114


329

Depreciation 

(81,825)


(81,825)


(85,982)

General and administrative expense 

(18,236)


(18,513)


(19,010)

Impairment of assets 

(27,225)


-


(71,268)

Restructuring and separation costs

(1,265)


(3,011)


-

Gain on disposition of assets 

50


510


802

     Total Operating (Loss) Income 

$     (52,375)


$          512


$      20,824








 

 


DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)






June 30,


December 31,


2018


2017

ASSETS




Current assets:




Cash and cash equivalents 

$         144,168


$         376,037

Marketable securities

274,671


-

Accounts receivable, net of allowance for bad debts   

203,131


256,730

Prepaid expenses and other current assets   

154,408


157,625

Assets held for sale   

67,815


96,261

Total current assets 

844,193


886,653





Drilling and other property and equipment, net of accumulated 




depreciation 

5,197,197

5,261,641

Other assets 

71,389


102,276

Total assets 

$      6,112,779


$      6,250,570





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities 

$         199,362


$         223,288

Long-term debt 

1,973,059


1,972,225

Deferred tax liability 

124,350


167,299

Other liabilities 

105,278


113,497

Stockholders' equity 

3,710,730


3,774,261

Total liabilities and stockholders' equity 

$      6,112,779


$      6,250,570





 

 


DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)






Six Months Ended


June 30,


2018


2017

Operating activities:




Net (loss) income 

$          (49,953)


$           39,488

Adjustments to reconcile net (loss) income to net cash




provided by operating activities




Depreciation   

163,650


179,211

Loss on impairments of assets

27,225


71,268

Deferred tax provision   

(61,160)


(54,425)

Other   

21,870


28,883

Net changes in operating working capital   

29,135

(87,544)

Net cash provided by operating activities 

130,767


176,881





Investing activities:




Capital expenditures 

(90,432)


(71,889)

Proceeds from maturities of marketable securities

300,000


-

Purchase of marketable securities

(573,837)


-

Proceeds from disposition of assets, net of disposal costs   

1,723


4,077

Other   

-


23

Net cash used in investing activities 

(362,546)


(67,789)





Financing activities:




Net repayment of short-term borrowings

-


(104,200)

Other   

(90)


(156)

Net cash used in financing activities 

(90)


(104,356)





Net change in cash and cash equivalents 

(231,869)


4,736

Cash and cash equivalents, beginning of period 

376,037


156,233

Cash and cash equivalents, end of period   

$         144,168


$         160,969





 

 

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES

AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY

(Dayrate in thousands)










































Second Quarter

First Quarter

Second Quarter

2018

2018

2017


Average Dayrate
(1)

Utilization
(2)

Operational Efficiency
(3)

Average Dayrate
(1)

Utilization
(2)

Operational Efficiency
(3)

Average Dayrate
(1)

Utilization
(2)

Operational Efficiency
(3)











Floaters

$317

53%

90.8%

$351

52%

97.0%

$391

47%

97.1%











Jack-ups

--

--

--

--

--

--

$75

86%

90.8%











Fleet Total



90.8%



97.0%



96.6%













(1)

Average dayrate is defined as contract drilling revenue for all of the specified rigs in our fleet per revenue-earning day.  A revenue-earning day is defined as a 24-hour period during which a rig earns a dayrate after commencement of operations and excludes mobilization, demobilization and contract preparation days.

(2)

Utilization is calculated as the ratio of total revenue-earning days divided by the total calendar days in the period for all specified rigs in our fleet (including cold-stacked rigs).  Our current fleet includes four floaters that are cold stacked. 

(3)

Operational efficiency is calculated as the ratio of total revenue-earning days divided by the sum of total revenue-earning days plus the number of days (or portions thereof) associated with unanticipated equipment downtime.

 

Non-GAAP Financial Measures (Unaudited)

To supplement the Company's unaudited condensed consolidated financial statements presented on a GAAP basis, this press release provides investors with adjusted operating income, adjusted net income and adjusted earnings per diluted share, which are non-GAAP financial measures.  Management believes that these measures provide meaningful information about the Company's performance by excluding certain charges that may not be indicative of the Company's ongoing operating results.  This allows investors and others to better compare the company's financial results across previous and subsequent accounting periods and to those of peer companies and to better understand the long-term performance of the Company.  Non-GAAP financial measures should be considered to be a supplement to, and not as a substitute for, or superior to, financial measures prepared in accordance with GAAP.  

In order to fully assess the financial operating results of the Company, management believes that the results of operations adjusted to exclude gains on the sale of rigs, restructuring and separation costs, impairment charges, as well as the related tax effects thereof and other discrete tax items, are appropriate measures of the continuing and normal operations of the Company.  However, these measures should be considered in addition to, and not as a substitute for, or superior to, contract drilling revenue, contract drilling expense, operating income, cash flows from operations or other measures of financial performance prepared in accordance with GAAP. 

 



Three Months Ended 



June 30,


March 31,


June 30,



2018


2018


2017

Reconciliation of As Reported Operating (Loss) Income to

Adjusted Operating (Loss) Income:






(In thousands)








As reported operating (loss) income

$    (52,375)


$         512


$     20,824








Impairments and other charges:






Impairment of rigs(1) 

27,225


-


71,268

Restructuring and separation costs (2) 

1,265


3,011


-

Gain on sale of rigs (3) 

-


(229)


-








Adjusted operating (loss) income 

$    (23,885)


$      3,294


$     92,092








Reconciliation of As Reported Net (Loss) Income to

Adjusted Net (Loss) Income:






(In thousands)








As reported net (loss) income

$    (69,274)


$     19,321


$     15,949








Impairments and other charges:






Impairment of rigs(1) 

27,225


-


71,268

Restructuring and separation costs (2) 

1,265


3,011


-

Gain on sale of rigs (3) 

-


(229)


-








Tax effect of impairments and other charges:






Impairment of rigs

(3,933)


-


(24,944)

Restructuring and separation costs

(183)


(274)


-

Gain on sale of rigs

-


146


-

Other discrete items (4) 

-


(43,320)


-








Adjusted net (loss) income

$    (44,900)


$    (21,345)


$     62,273








 



Three Months Ended 



June 30,


March 31,


June 30,



2018


2018


2017

Reconciliation of As Reported (Loss) Income per Diluted Share

to Adjusted (Loss) Earnings per Diluted Share:













As reported (loss) income per diluted share 

$       (0.50)


$        0.14


$        0.12

Impairments and other charges:






Impairment of rigs(1) 

0.19


-


0.51

Restructuring and separation costs (2) 

0.01


0.02


-

Gain on sale of rigs (3) 

-


-


-








Tax effect of impairments and other charges:






Impairment of rigs

(0.03)


-


(0.18)

Restructuring and separation costs

-


-


-

Gain on sale of rigs

-


-


-

Other discrete items (4) 

-


(0.32)


-








Adjusted (loss) income per diluted share 

$       (0.33)


$       (0.16)


$        0.45









(1)

Represents the aggregate amount of impairment losses recognized during (i) the second quarter of 2018 related to our jack-up, which was reported as "Assets Held for Sale" in our Condensed Consolidated Balance Sheets at June 30, 2018 and December 31, 2017 and (ii) the second quarter of 2017 related to two of our floaters.

(2)

Represents restructuring and separation costs recognized associated with a plan to restructure our world-wide operations, including a reduction in workforce at our corporate facilities and onshore bases.

(3)

Represents the gain recognized during first quarter of 2018 related to the sale of one of our floaters.

(4)

Represents a discrete income tax adjustment recognized during the first quarter of 2018 to reverse a $43.3 million liability for an uncertain tax position related to the toll charge recognized in the fourth quarter of 2017 in relation to the recently enacted U.S. tax reform legislation.

 

Diamond Offshore Drilling, Inc. Logo. (PRNewsFoto/Diamond Offshore Drilling, Inc.)

 

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SOURCE Diamond Offshore Drilling, Inc.


Source: PR Newswire (July 30, 2018 - 6:00 AM EDT)

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